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Transcript: Community Broadband Bits Episode 38
Thank to Jeff Hoel for providing the transcript for the episode 38 of the Community Broadband Bits podcast with Jill Boudreau, Kim Kleppe and Jana Hansen of Mount Vernon, Washington, discussing their open access fiber network connecting area businesses. Listen to this episode here.
Lisa Gonzalez: Hi, there, and welcome to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
This is Episode 38. And Christopher Mitchell takes us to Mount Vernon, in the state of Washington. The municipal network in Mount Vernon is an open access network that connects schools, municipal facilities, hospitals, and businesses in their own town and also in the nearby communities of Burlington and the Port of Skagit. Mount Vernon does not provide the services themselves but allows independent service providers to contract with local businesses over the city's infrastructure. Christopher visits with Jill Boudreau, Mayor of Mount Vernon, and also with Kim Kleppe, Information Services Director for the city, and Jana Hansen, Community & Economic Director. Let's go to the interview.
Christopher Mitchell: We're going to start today with an introduction from Mayor Jill Boudreau. Thank you for joining us for the show, and telling us a little bit about your community.
Mayor Jill Boudreau: Oh, thank you so much. You know, the City of Mount Vernon is a really dynamic small city in northwestern Washington. And we have an amazing infrastructure with our fiber optic network. Managing it for economic growth, but also the benefit for the city residents. And we're really proud of the fact that we have that.
Chris: Excellent! Yeah, I was very excited to hear about it. So I'm looking forward to helping our audience to understand more about it.
Mayor Boudreau: Well, thank you for giving us the opportunity to share.
Chris: So now I'm joined by the Community Economic Director of Mount Vernon -- that's Jana Hansen. As well as the Information Systems Director, Kim Kleppe. Thank you for coming on this show to help us learn more about this network.
Jana Hansen: Hello. We're happy to do so.
Kim Kleppe: Yeah. We're very happy to get it out there.
Chris: Can we take a step back and just get a sense of where this network began?
Kim: Sure. I can give you what started this network. There's a couple key things at the beginning. We were -- way back when, we were trying to hook up our treatment plant back to City Hall. So we installed fiber to that in 1995. And we connected a couple of our buildings back then. And what really started this whole thing, in the year 1997, the mayor and the police chief at the time approached me, as they wanted to buy a new building for the police department. And so -- and they asked me, how are we going to connect to them. And I said, well, we need to install fiber. Well, it was a long run -- it was a 2.5-mile run to where they were going to locate. And so we proceeded with that. And in that time, we also made a deal with a 9-1-1 center and the county to share some expense and the cost back then. And so with that, in 1999, we completed the first half of the fiber ring. And that's what got going.
The previous year, in 1998, we had a huge community economic fiber summit. And we even had Bill Gates' ** speak at it. And we had a full house of 325 seats filled, to go over the fiber infrastructure and what we could do with the community -- back in 1998. So we had a very good kickoff for this whole thing. And at the beginning, we provided fiber for mainly the schools, the hospital, the county, the PUD, and the college. And we just created a plan where everyone paid into a maintenance plan, to keep it up -- upkept, and fix anything that would happen along the way.
Chris: When you decided to just go ahead and start building these -- this fiber network, I'm curious if you were intimidated at all. We find that many of the communities that have done this do it through an electrical department. And you did not do that. You don't have an electrical department in Mount Vernon, and so ...
Chris: ... you just went ahead and did it. And I'm curious what was going through you mind as you were making that commitment.
Kim: Just do it. I mean, there wasn't anything going by. We were just trying to come up with the money. The first part of the money, we got -- we did the build, but we were able to finance it internally. Then we got a larger grant -- what we call a CERB grant -- Jana can speak better to that -- to help finish the other half of the ring.
Jana: Community and Economic Revitalization Board. You can submit application for any type of economic development project to that board. And then they select those that are worthy of the award.
Kim: And we received that grant in the year 2000. And that's when we were going to build out for excess capacity to businesses and the community, outside of the government agencies that I spoke of earlier. So, with that, we brought in our first provider, in the year 2001. And the plan there was to help to be able to get fiber to businesses, and grow. And that's the start of how this went. And since then, we how have eight providers on the fiber. We do a passive optical network. And we do a little bit of dark fiber -- not a whole lot of it. Case-by-case basis. If someone really needs inter-department, inter-business connectivity, or if they want a bigger bandwidth to the big pipe outside the city.
Chris: As you started making the initial investments, they were -- was that from something you budgeted in the normal process? Or was there some bonding? Or was the initial funding from some of the grants?
Kim: You know, we did -- we had a very unusual -- as a -- building these agreements with the various agencies, like the school district and the county and the PUD and the college, for example. We were able to build -- once we built the ring, we were able to share costs with some of the installations. And a lot of the same areas also went to some of our -- maybe our sewer pump stations were close to a school, or close to a county, or by the college. We were able to hook up some of these other businesses. And they would just pay the cost of the connection to get into the fiber. So we shared a lot of costs to build it up in the beginning. And had very good government relations with that. And it worked really well. So that's how it got built.
Chris: OK. So you didn't have to take on any debt. It was more the departments were -- it sounds like -- cost-shifting, right? Like they would have been leasing those connections anyway. And with this they were able to get a far better connection at a lower price by working with you directly.
Kim: Absolutely. We've taken on no debt building this.
Chris: That's really incredible, given the results that you've had.
Kim: Yeah. It's been a good community project with everyone involved to participate. Later on in the plan, the city of Burlington and the Port of Skagit, we got another grant -- Skagit County 0.8 sales tax grant -- to help deploy fiber to Burlington and extend a little bit more our demarc locations in Mount Vernon, and go all the way out to the Port. We did that -- built that in 2008. So expand the fiber into two other community areas.
Jana: And that's been a tremendous success through the Port of Skagit. Because they've been able to place businesses out there because of the infrastructure that we've provided. So, a good economic development story there.
Chris: Excellent. I want to turn into that. For the listeners who are unfamiliar, Burlington is a little bit north of Mount Vernon, and the Port of Skagit is just to the west. So you're sort of a trio of communities, it looks like, on the map. And I would guess that your economic fate is intertwined. So it sounds like you're not really competing over jobs, you're working together to make sure that there's plenty of jobs for everyone.
Chris: So, let's talk a little bit about the benefits. What are some of the economic development results you've seen, as a result of the network?
Jana: Well, you know, the healthcare industry is one of the leading economic drivers in Mount Vernon. And we just have a great network of healthcare providers in Skagit. Valley Hospital is, of course, the major hospital in the region. And having that connection has provided -- has allowed them to grow in many ways. And one of the companies that come here because of the fiber infrastructure, and also because of the healthcare industry is MIN-NS, I believe.
Kim: Yeah. MIN-NS. Which stands for Medical Information Network for the North Sound.
Jana: Right. And they rely on the fiber network to be able to do their work. And they provide all of the IT work for the different healthcare providers up and down the I-5 corridor in the Northwest region. So, companies like theirs, and other companies, we've seen come again from the Seattle area, because of the fiber infrastructure that we have in place. Aerospace industry, because we're so close to Seattle and Everett, is big here as well. And a lot of the engineering firms that have come here and have established businesses again rely on that fiber optic network. So those are two main economic drivers here in the valley. And, you know, of course the technology. And we -- you know, I just mentioned MIN-NS. But we had one come up from Seattle recently, Digital Legal, bringing 22 jobs with it. They were on copper, down on Pioneer Square, and came here because of the quality of life. But, again, without that fiber infrastructure, they may not have selected us. But we're perfectly situated, geographically, between Vancouver, BC, and Seattle. We've got technology, banking, government, healthcare, aerospace, manufacturing, and others. But those are the main industries that support this valley. So being able to provide this infrastructure is a way that a public agency can -- it's such a benefit, to affect economically, in allowing these industries, that we want to see grow here, come here and flourish and provide the jobs.
Chris: It's interesting, because I know that Seattle recognizes the problem it has with Pioneer Square. And the dynamic, if I had to guess, was, you have a company that's not having its need met. It's looking around. And they may not have recognized the benefits of moving to your community if you didn't have the fiber optic network. You know, we're always trying to have a realistic approach of how companies deal with this and make these decisions. And I'm curious to what extent the fiber network attracts new businesses.
Jana: Well, I don't th- -- Yeah. And I don't think we would have gotten the interest, from those two companies we just mentioned, if we didn't have it. It's interesting. When we look at the demographics, these are people that have families or are older. It's not necessarily the people coming out of the schools that want that high-action lifestyle. So, it's that second, third, fourth phase of their lives. And they move to an area where it's affordable, where, you know, they have the -- whatever their interest might be -- if it's outdoors, just living in a nice, clean environment. That's what they're looking for. And that added bonus -- or, perhaps, driving factor -- having that infrastructure to support their business needs, makes the decision easy.
Chris: To what extent has the network helped with the schools and the hospitals? I mean, you mentioned briefly that that was one of the original focuses of connecting them. I'm curious if there's a -- if you can give us a sense of what kind of connections these community anchor institutions have, and what the savings are for them.
Kim: The schools have always -- and the hospitals -- been a partner with us since '99. And as we started interconnecting -- the hospital actually got connected in 2001, on the back side of the ring. And the schools -- we started in '99 connecting the high school, and then a couple of smaller schools at that point. And when we built the ring around, we were able to interconnect with the rest of their schools. So, right now, with the seven schools, and two administrative offices, we have ten sites with them, connected up on the fiber. Well, they enjoy no monthly charges for this. They are allowed the benefit of having the fiber, at gig speeds, on a ring, without having to pay a monthly charge. So, if they were to pay a monthly charge, they couldn't afford to do it. Dark fiber provider -- just for dark fiber here -- would charge $700 a month for one port on that. That's the comparable rate up here. They couldn't afford to do it for cost.
Chris: And when you say one port, that's basically one site per month.
Kim: One site. That's one site per month. And they could not afford that. With the healthcare industry, they're interconnecting with the health industry. And that's only going to grow at this point. But they're going to interconnect and allow the same thing, and reduce these costs. And, somebody who's already paying a large sum a month, to help to reduce their cost, so they can better use that money for other things. And with the city, we -- I estimated, back in about 2002, 2003, with all our interconnect and with all our facilities we have, we save over $100,000 a year, just having the fiber, not paying those costs. And when we hooked up, for FAX, when I hooked up Burlington on fiber, in -- finished in 2005 for those facilities, we actually took $52,400 off the books they were spending, a year ...
Kim: ... centralized on the voice and data. And that doesn't get the benefit of not only taking that off but get network around to all their facilities in Burlington. So, there is a huge cost savings. I could never quantify in Mount Vernon, but I know it's in excess of $100,000 we save a year that we wouldn't -- that we don't pay, because we own our own infrastructure. And that allows us to use those, from those savings, to do other things. Plus, a lot green networking for the government agencies. And still with support of a maintenance contract, where we set up and advisory group, so if we ever need to replenish that, everyone's on board with that, in original agreements.
Chris: So, what happens right now? It sounds like this network is running very successfully. What happens with the net income you bring in? Does it sit in an account waiting for future network expenses? Or is it able to be -- some of it go to the General Fund, to lower other pressures on the tax base? What happens?
Kim: Well, right now, the funding we bring in there, most of it goes back into a fiber fund. And we've built up a capital reserve with this. Of funding. Right now, we don't have a lot of -- Right, in our capital reserve. But we don't spend -- We have about $100,000 in reserve. And we -- it's sitting there -- in the fiber fund. Can we allocate some of this out to the General Fund? At some point, yes. We have seen, in the last two years, since a new mayor came on, a trend for getting out fiber's gone way up. We're suddenly getting a lot more businesses and entities getting on fiber. So that's going to go up. And we'll probably see, at some point, being able to allocate a lot more back to the General Fund, as a profitable -- a very profitable venture here. We have not, like I said, been in the red, ever since day one. The plan we did was kind of a baby step plan, where we brought the infrastructure in, we did a lot of the basic set up, even with the PON equipment, with a grant, where it allowed us to provide services without any being in the red at all. And if we deploy fiber with the monies we receive, we were able to keep outreaching to different places, and spider-webbing it out. And so it's gone very well from that point of view.
Jana: And it allows us to be nimble. So if we have a business that's working at a site that we haven't extended fiber to yet, we've got the ability to do that. And, you know, that's such a difference between the public and the private, in that we're responding to those economic needs. And we can do it quickly. So, you know, as opposed to perhaps the private side, which may wait 'til there's a larger employment base, and business case to serve. So, we're ready to do that.
Chris: This is exactly what I wanted to ask you, is if you could walk me through. Let's just say that I have a business that I want to locate in the area, and you haven't built out to the area where I am. I know that in other communities, the -- that business might go to an existing provider, or several, and ask for better services. And if they have a very high need, they might have to pay a very stiff up-front fee for the build-out cost. And then there's going to be a very high monthly payment for high-bandwidth speeds. So, what's different in working with you? I call the Mount Vernon fiber optic network. And what happens next?
Kim: Well, what happens -- typically, for me, I get a location or an address. And I take a look at the location/address where the fiber is. Now, since we've been able to deploy fiber in business areas almost everywhere in the city, we don't have an issue. The biggest issue what I have if I'm a business where there's not a clear-path entry to a building. And I'm trying -- been working -- And we did an ordinance back in 1996 to make sure we've go conduit in the ground and -- where -- when construction was going on. So we had developers put it in a lot of locations, that -- to help offset some of those costs. And that's probably the largest cost to get into a facility, is that clear-path entry to a building. So, we look at the cost. And then we look at the -- I'll look at where it makes economical sense for the city to deploy that -- a closest demarc, as I see a good point to get to multiple businesses in the area. There is occasionally one in the blue that comes up, that's too hard to build there, because we're not quite there yet.
Chris: Um hum.
Kim: Except very, very rare. Most of the time, I can figure out a way to make it work. And the city, ourselves, I put a little of the money coming from the fiber money coming in to help to deploy fiber out there. That's what I use money -- to help keep building it out farther and farther, so it gets reinvested back into the fiber. So it helps businesses get on, and get what they need, and helps bring them to town easier that way.
Chris: And so the businesses aren't a partner in the same way that the schools are, I'm guessing. Right? The businesses have to pay a recurring fee.
Kim: They don't pay a recurring fee to the city. They pay a recurring -- they go to a provider -- we have eight providers, and they choose the provider. And how it works is, we charge the provider 15 percent of the gross of what they make. So if they charge them $300 a month for fiber bandwidth -- say they want a 50-meg connection to the Internet, then they charge them $300 a month -- we would get $45 a month for that.
Chris: Right. I neglected to mention, up until now, that this is an open access network. That -- you build it out, and you do not compete with the private sector. You enable all manner of independent ISPs to get on and to create a real market for services.
Kim: Yeah. That's correct. Absolutely. And it also kept our costs way down. We don't have to have the personnel to do that. We don't have to manage that infrastructure, and get all those calls for services. And having the private business do what they do best made sense. I mean, particularly, Tacoma, at the time, they have Click! Net. You're probably well aware of Click! Net ...
Kim: ... in Tacoma, where they provide all three services -- voice, video, and data down there. Well, they have quite a network down there built for that. But it's all -- they own it all. But it's -- I don't -- I saw a lot of headaches trying to go down that path. Can we do that? Yes. But we don't.
Chris: Is there anything else that we should know about Mount Vernon during this discussion?
Jana: Yes. We're a great place to connect. So, bring your businesses here to Mount Vernon.
Kim: We're very tech-driven here right now. And we're starting to forming -- you're familiar with TAG [Technology Alliance Group] in Bellingham, you said. And we're forming a new TAG -- Skagit TAG Association -- here, down in Mount Vernon. And we have quite a turnout of technology people here already. A lot of ** on the fiber, and being aware of what the possibilities. And so we're trying to attract technology people to our location here.
Chris: Excellent. Well, it sounds like you're already well on your way to succeeding in that effort. And if I didn't love winter so much, I should be tempted to come and check it out.
Jana: Yes. You should.
Chris: I'm running out of room in the United States. I'm going to end up in Canada, both the way winters are going, unfortunately. So ...
Chris: But I do want to ask you, as you are expanding the network, do you have any tips for other communities that want to make investments like you have, and how to best develop a map, and have a sense of how to coordinate different kinds of infrastructure projects? Any tips?
Kim: Well, the number one thing is the -- being open with your community partners. Because you can't build it without community partners. And you need both partners in the government side -- in the public side -- and also on the private side, to really be successful. If you can't build those partnerships, you might as well -- it's tough -- it will be tough on you.
Jana: But, you know, using your comprehensive plans, and your zoning maps, and things like that, those tools will identify those areas that are intended to grow -- for office, for business. And that's where you would want to focus your efforts and your money, to put in that infrastructure. And, as Kim mentioned, ensuring that when you do have a development project in place, just like they put in the sewer, the water lines, and all the other utilities, that the conduit is also part of that.
Kim: You learn to share costs with your partners -- is a big tip. When you're deploying, you look at an area. And then, usually what I do is, if we're trying to build a connection for a school, or a hospital, I try to bring in, well, what else is in that area. Same with us -- ourselves -- if we're going to another pump station, what else can we -- help offset some of the costs of the build. You know. So, usually, when we get a build to a customer -- we had one here just this last year that -- it was a successive building down there. So I had everyone -- the providers all market in the area heavily at the time, to help offset some of the costs. And it's worked out really well. We went in with one customer that had to move. And since then, we've added five more down there. Just because of that -- on top of the one. So it's worked out real well.
Chris: When you say "partners," I -- you know, I immediately think of the schools, the hospitals, the other municipal departments. Who are some of your partners in the private sector?
Kim: Private sectors have to do basically in a development area. You become basically -- when you get a -- usually the private area -- usually working with the providers -- and letting know -- and they're going out soliciting areas for fibers coming to this area. And when you do that, you end up partnering with multiple businesses to reduce your costs. I did another build last year where I was trying to -- a provider moved -- actually, two providers moved to another area, out College Way, one of our main roads out here. And, with that, I also hooked up two other businesses out there at the same time, to reduce costs, with a third ready to come online. And, with that -- we work with the providers, and say, OK, now we can split the costs over -- some costs -- this private investor wants to get on is going to pay a little bit to get on the fiber. And this one is going to pay some. This provider's going to pay some. And this other provider's going to pay some. In proportion to getting on. And then the city, ourselves, we pay a share of that, too, to help get the build going. So that's what I mean by the public-private. We work with partnerships to make it happen.
Chris: And how did you find these providers that became partners? A lot of times, communities are looking for them, and they sometimes don't know where to look.
Kim: Well, the -- they've come at different times. The first one came, we sent out a request for proposals -- an RFP -- way back when, to get our very first one, back in 2001. They just send a ** -- how can we be a provider on your network? We don't charge a provider just to be connected to us and provide it. We charge them for everything they -- everyone they hook up, they have to pay for.
Chris: Um hum.
Kim: Right now, we're up to eight. We had, actually -- Another thing, with our provisioning up here -- 'cause we're connected on a backbone going to Canada, to the Hastings Building, and to the Weston Building in Seattle -- we can get any provider we want riding up here, really, with that. 'Cause we're on big pipes going up to both end -- places, where everyone sits.
Chris: Right. I think you have the benefit of having a lot of other open access networks around you. Which, you know, is something that other communities might want to think about. Which is, if you're, you know, 700 miles from a nearby -- the most nearby open access network, ah, you know, it might be good to work with some other local communities to try and attract multiple providers.
Kim: Funny you should say that. We're -- actually, with our backbone -- we're on multiple rings in the state. So anyone can put their stuff anywhere. They don't have to be sitting here, and working. We don't go down. We can't go down now, because there's so much riding on it.
Chris: Terrific. Well, thank you so much for both of you coming on, and helping us to learn more about the community. I hope that it puts you on the map for some of our listeners.
Jana: Well, thank you, Chris. It was great. Thank you.
Kim: Thank you.
Lisa: That was Christopher, with Mayor Jill Boudreau, Kim Kleppe, and Jana Hansen, talking about the open access network in Mount Vernon, Washington. If you visit the city's website, at mountvernonwa.gov , you can learn more about their fiber optics from the City Services menu. We want your questions or comments. E-mail us at firstname.lastname@example.org . Follow us on Twitter, to learn all about the most recent developments relating to community networks, broadband policy, and telecommunications. Our handle is @communitynets . This show was released on March 19th, 2013. Thanks again to D. Charles Speer & the Helix for their song, "Freddie's Lapels," licensed using Creative Commons. Have a great day. And thanks for listening.
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